Even if you haven't been able to save all the money you need for college,
several alternatives exist to help you make up the difference.
Financial assistance comes in many shapes and sizes - from scholarships
and grants, which do not need to be repaid, to federal loans, which carry
very favorable interest rates and terms, but must be repaid eventually. The
following are a few of the most popular sources of financial assistance:
Calculating Financial Aid
Usually due before January 1, the standard federal Free Application for
Federal Student Aid (FAFSA) determines how much, if any, financial
assistance the government will award to your child. Both private and public
schools use this standard form to dole out their own scholarship monies as
well. Additionally, some schools now require the Financial Aid Profile for
assessing the need for non-government dollars.
Working with a number of factors, a school will determine each family's
need for financial aid. From there, financial aid officers will attempt to
craft a package, often combining both grants, which don't have to be paid
back, and loans, which must be repaid later, usually with accrued interest.
Clearly, the better deal is the free money. Often the earlier one applies,
the more of their funds will come from the "grant" side of the ledger.
Government Loans: Stafford: With a Stafford loan, the US Government
either provides the funds for the loan, or guarantees the funds loaned by
other institutions. The loans are available regardless of family income, but
for families with incomes under $70,000, no interest accrues and no payments
are required until the student leaves school.
Government Loans: PLUS: The Parent Loan for Undergraduate Students (PLUS)
loans are federally funded and guaranteed loans issued through local banks,
credit unions and savings & loan institutions. The maximum loan amount is
defined as the total cost of college, minus the amount of financial aid
received. Repayment of principal and interest begins immediately with
interest capped at 9%. Loan insurance is required to qualify for a PLUS
loan.
Work/Study Grants: Many colleges and universities offer work/study
grants. Sometimes their earnings are deducted from tuition and other times
the student earns a salary.
Americorps: This network of national service programs engages more than
50,000 Americans each year in intensive service to meet critical needs in
education, public safety, health, and the environment. It is open to U.S.
citizens, nationals, or lawful permanent residents aged 17 or older. Members
serve full or part time over a 10- to 12-month period.
After successfully completing a term of service, AmeriCorps members who
are enrolled in the National Service Trust are eligible to receive an
education award. The education award can be used to pay education costs at
qualified institutions of higher education or training, or to repay
qualified student loans. The award currently is $4,725 for a year of
full-time service, with correspondingly lesser awards for part-time and
reduced part-time service. A member has up to seven years after his or her
term of service has ended to claim the award.
The GI Bill: Veterans, active duty personnel, and their families are
eligible for a wide variety of benefits and loan repayment programs under
the GI Bill, U.S. Army college fund, and VA educational services.
These are just some of the many ways to defray the rising costs of
college. Contact us for more information on how to make higher education a
reality for your children or grandchildren - or perhaps even yourself!
